Abstract
Land taxes are widely viewed as an efficient source of public revenue, yet explicit land taxation is rarely implemented. We study a closely related but largely overlooked object: implicit land taxes that arise within standard property tax systems when tax assessments place different relative weights on land and structures than market valuations do. Using parcel-level data on assessed values and transaction prices from U.S. counties, we estimate these implicit land taxes by comparing assessor and market hedonic valuations. We find substantial dispersion in implicit land taxes across and within metropolitan areas. Counties with higher implicit land taxes experience faster growth in population density, business establishments, earnings, and demographic diversity. These patterns are consistent with theoretical predictions that taxing land more heavily than structures encourages denser and more productive development.